About 300 investors in Singapore pumped US$11 million (S$14.9 million) into CTL Global’s plan to buy up distressed houses in the US. The New Paper on Sunday found out after contacting Ms Clara Tan, the company’s founder.Ms Tan, who is in the US, spoke via Skype from the US city of Indianapolis, in Indiana, on Feb 6, saying: “We have about 100 investors who bought property in Memphis (in the US state of Tennessee) and 200 who bought in Indianapolis.

“The properties in Indianapolis are a lot cheaper. So about US$7 million went to Memphis. The rest of the investment went to Indianapolis.”

On Feb 1, TNPS ran a report on the trouble that seven investors were having with their investment.

They had met Ms Tan during different property seminars and bought into her scheme between 2012 and 2013.

But months after pumping in thousands, some of them claimed they did not get the returns they were promised.

There was more trouble later, with some properties even facing the threat of foreclosure.

Ms Tan, 40, says she then dropped everything here to fly to the US to ensure “things were in order”.

UNPLANNED TRIP

She has been in Indianapolis for the past four months on an unplanned trip.

“Last September, I found out that the property management company was not paying the rental to the owners and that the property manager has fled with the money,” she says.

“So I flew to Indianapolis and stayed to fix the situation.

“In order to ensure that things are managed smoothly, I have decided to set up my own property management company in Indianapolis,” she says, adding that the process takes time.

Ms Tan claims that it was only last month that she got the rental back.

Ms Tan says that the past four months in the US has been difficult.

She lost US$500,000 of her own money to contractors, who she claims cheated her repeatedly with shoddy work.

She claims CTL Global has legal proceedings against at least two of these contractors.

“I was stabbed by a tenant and Randall (her assistant) had a gun pointed at him,” she recalls.

Ms Tan did not state how bad her injuries were.

She also denies being investigated by the Federal Bureau of Investigation (FBI) as suggested by one of the investors, or that her passport has been impounded.

Flashing it at the web cam, she says: “I have my passport here with me and if you look at the pages, there is nothing here to indicate that it was impounded at any point.”

A report in The Indianapolis Star, published in September 2013, said that CTL Global Holdings had already resold some of its Indianapolis properties “at prices sharply higher than it paid for them to buyers with Asian names”.

Ms Tan says the property was indeed sold for US$38,334 after buying it for US$10,000.

“But I spent US$24,000 of my own money renovating the place.

“So in the end, I only made about US$4,334,” she insists.

She also claims she has helped a couple of Singapore investors pay their mortgage loan for at least three months when they were in financial difficulties.

Having helped some of them out, she hopes the investors will be patient as she claws her way out of the mess.

The investors, who have been waiting for months to hear from her, were not completely convinced.

One, speaking on the condition of anonymity, describes Ms Tan as being a rookie even though she spoke like she was an expert when she was selling the investment scheme.

“She has so many unforeseen situations that proves she doesn’t really know what to look out for.

“And she has no full awareness of what her operational issues were until investors flagged it,” says the investor.

How their trouble started

The scheme promised a hassle-free investment in the properties in Memphis and Indianapolis.

Investors were told they would own the properties, which would be repaired before being rented out within three to six months.

Then they would be earning passive income from the tenants.

None of the investors was familiar with the US property market and they left it to self-styled property guru Clara Tan, who allegedly told them she would handle everything, from the loans to legal letters.

That CTL Global appeared to be a “one-stop shop” drew many of the Singaporean investors in.

Then, out of the blue, the home owners received letters from lawyers in the US telling them to pay up or their property would face foreclosure.

At their wit’s end, seven of the 300 investors decided to share their stories with the press.

The New Paper on Sunday met them on Jan 24. They said they received no returns from the rentals.

Instead, US banks sent them letters for mortgages unpaid and warned of foreclosing the properties.

Ms Tan, who made the “sales pitch”, had also stopped taking calls and answering e-mails, they claimed.

The seven have since made police reports against both Ms Tan and CTL Global.

What she says

Q If the money invested goes into the buying and flipping of the properties, then why are there bank mortgages?

A I don’t do fixer-uppers or flip the properties.

What my company does is turn-key housing projects.

We buy the house, renovate it and lease it out to a tenant before selling it to a buyer.

The potential owner is buying an investment property, which is already producing rental income.

At times, we will guarantee the rent while we search for the tenants.

I also don’t borrow money from the US banks directly, but should the investor need to, then we will provide that option on their behalf.

Q We also understand that the investors have signed their power of attorney over to you and CTL Global Holdings.

If so, then why are they still made to handle the banks, land and property taxes themselves?

A The power of attorney (POA) was never signed over from the start for that.

It was only when we had trouble with the first property management company that we asked them to sign over their POA, to facilitate the transfer from one property management company to another.

This POA is limited and does not allow us to carry out other transactions on the investors’ behalf without their informed consent.

Q In a January article in the Indiana Star, you were quoted as saying you may have lost US$500,000 or more for several reasons.

These include failure of contractors to deliver and contractors who ran away with the money.

Whose money was it? What part of that sum was money put in by the investors?

A It was all my own money.

The first contractors did shoddy work or none at all.

One took a year to renovate one house. It’s what I call bad debt.

I try to put these behind me and carry on.

TIPS ON FOREIGN INVESTING

Think all foreign property investors are the C-Suites, senior management and business owner types?

There’s now growing interest among the middle income group too, says Ms Doris Tan, regional director of international property services at investment management company Jones Lang LaSalle Incorporated.

Singaporeans, it seems, have an insatiable desire for property investments.

In 2013, Singaporeans snapped up $3 billion worth of overseas homes, up from $1.9 billion in 2012, the Monetary Authority of Singapore (MAS) said.

Latest figures show that in 2014, Singaporeans bought about $1.1 billion worth of overseas residential properties in the first half of last year.

Apartments and houses in cities like London, Melbourne and Kuala Lumpur have always appealed to investors here.

But in the last three years, developers have pushed properties in far-flung places such as Marrakech in Morocco, Memphis and Indianapolis in the US, and even developments in Brazil and the Bahamas.

Typically, investors look for a stable yield of at least three per cent and they want to be able to re-sell these properties after five to 10 years.

MAS is monitoring closely to ensure financial stability and financial prudence among Singaporeans and has offered some tips:

Investors should be mindful of the risks associated with the property price cycle, as they are more difficult to assess or manage when investors are unfamiliar with conditions in overseas markets.

The varying legal and regulatory framework governing property purchases and financing agreements varies in other countries.

The foreign exchange risk if rental proceeds is in a foreign currency, while the loan taken to finance the property purchase is in Singapore dollars.

The interest rate risk when a loan is taken from a foreign bank whose interest rates may be higher and can move up sharply.

Guest Speaker Mr. Hemant Amin, Founder, Chairman and CEO of Asiamin Capital, a single family office, and Founder and Chairman of the BRKets investor groupMarch 17th, 2015

Hemant, a big thank you for educating and inspiring the next generation of leaders. You are a rare positive role model in the Asian capital markets and you showed the students that it is possible to create value because one has the right values and mindset like Buffett and Munger! :)